Obamacare: How to switch plans, get kids coverage

By Michelle Andrews, Special to The Washington Post

Wednesday, May 1, 2013

How does the Affordable Care Act affect children in low-income families and people who want to buy coverage on the new state insurance exchanges? Below find some answers to questions that were posed by readers.

Q: I am the breadwinner for a family of five, including my wife and three kids. The insurance for me is cheap, but for the entire family it’s prohibitively expensive. I’d like to know if the health-reform law is doing anything for the kids of families — like mine — that earn less than 200 percent of the federal poverty level.

A: Your kids are probably already eligible for health insurance through your state’s Medicaid or Children’s Health Insurance Plan, says Edwin Park, vice president for health policy at the Center on Budget and Policy Priorities. That shouldn’t change in 2014 when the Affordable Care Act requirement that most adults and children have health insurance kicks in. In many states, children whose parents earn up to 200 percent of the federal poverty level (meaning about $55,140 for a family of five in 2013) are eligible for coverage through these existing insurance programs for children in low-income families.

Starting next year, your options will depend on the coverage your employer offers. If your employer won’t be offering family coverage, your wife and kids can look for subsidized coverage on the new exchange in the state where you live. They would be eligible for new health premium tax credits that will be available for families with incomes up to 400 percent of the federal poverty level ($110,280 for a family of five in 2013). In addition, subsidies for people with incomes below 250 percent of the poverty level could reduce their out-of-pocket costs for deductibles, coinsurance and co-pays for medical care.

If your employer will offer family coverage, however, your family’s eligibility for subsidized coverage on the exchanges will depend on whether your job-based coverage is considered unaffordable or inadequate under the law. If the cost for single coverage is more than 9.5 percent of your income or the policy doesn’t cover at least 60 percent of your allowed medical costs, your whole family could be eligible for subsidized coverage on the exchange. But if the coverage available through your job meets those standards, your family won’t be eligible for subsidized coverage, Park says.

Q: Will my family be locked into a one-year contract with my company policy if we sign up for a plan with a May 1, 2013, start date? I want to know if we can participate in the October open enrollment period for plans on the health insurance exchanges.

A: Generally, workers and their family members are allowed to add or drop employer-sponsored coverage only during the company’s designated enrollment period each year unless they experience a significant change in their lives such as a birth or marriage.

Although many health plans have established Jan. 1 as the date when a new plan year begins, some company plans, like yours, use different dates.

Starting in January, most people will be required to have health insurance, and the state-based health insurance exchanges will open for business. To ease the transition, guidance from the Internal Revenue Service says that employers with 50 or more workers can choose to allow employees to add or drop their employer-sponsored coverage once during the 2013 plan year even if they haven’t experienced a significant life event. That would allow people who may not have signed up for employer-sponsored coverage to do so in January 2014, even if their health plan year doesn’t start then. It would also allow people like you who want to switch to an exchange plan to sign up before the end of your plan year.

It’s up to the company to decide whether it wants to make this change, says Julie Stone, a senior consultant at benefits consultant Towers Watson. If you want to switch, check with your company to see if it plans to offer this opportunity.

This column is produced through a collaboration between The Post and Kaiser Health News. KHN, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health-care-policy organization that is not affiliated with Kaiser Permanente. E-mail: questions@kaiserhealthnews.org.